JD Logistics puts on a brave face as JD’s delivery spin-off makes a smaller bump than expected in Hong Kong trading debut

JD Logistics, the second unit to be spun off from JD.com for a listing, has put a brave face on its Hong Kong trading debut, as its stock changed hands with a smaller premium than the market’s expectations. The company’s shares began trading at HK$46.05, for a gain of 14.1 per cent from its initial public offer (IPO) price of HK$40.36, lagging behind the 20 per cent jump that brokers and analysts were expecting. Still, the company’s chief executive remained unperturbed.

“As an integrated supply chain logistic services player, I don’t think we have direct competitors in (China),” JD Logistics’ chief executive Yu Rui said in a televised press conference in Beijing marking the company’s trading debut in Hong Kong. “For us, the impact of price war is relatively limited because express delivery service is a way for us to gain new customers for our supply chain solution offerings,” rather than its core business focus, he said.

JD Logistics is expecting its 2021 loss to widen from last year’s 4 billion yuan (US$627.6 million) according to its IPO prospectus. Full-year deficit will be at a “relatively healthy level,” Yu said without elaborating. Losses at the delivery unit, 64.4 per cent owned by Jingdong Technology Group, narrowed to 2.2 billion yuan in 2019 from 2.8 billion yuan in 2018.

“Our differentiation is in our supply chain logistics solutions,” he said. “We will continue to focus on investing in data computation technology, robotics to help address our customers’ supply chain needs.”

Still, the premium in JD Logistics trading debut has bucked the overall lacklustre first-day performance of Hong Kong debutants this year, and investors winning a piece of its new shares would hope that such strong performance seen Friday morning would persist.